If you have just started to dip your toe into the home-working and freelancing arena, you may not be thinking about all those years down the line when you will retire quite yet. However, the sooner that you can do this the better because you will allow enough time to build up a decent investment amount to retire on. After all, as a freelancer there is no compulsory system for saving for your retirement that you can fall back on so you need to take action yourself to ensure your financial future. A great way of doing this is to open an IRA or Investment Retirement Account – something that you can find out more about below.
What are Investment Retirement Accounts?
An Investment Retirement Account or IRA is a way of making the most of your money and setting yourself up for financial stability in your retirement. You can put in around 5,500 dollars a year and then use this money to invest in certain markets. This is something that can help you increase the nest egg that you have to withdraw from once you reach retirement age.
The problem of loss
A pitfall that you need to watch out for as a freelancer with IRA is that like all investments it is possible to lose money as well as make it. This is not so great if you do not have a long time between when you invest and when you will need to access your IRA, as you do not have continuous years to make this money back.
However, losses largely depend on the type of investment you have chosen for your account. Things like foreign investment stock are riskier and best to avoid if you are hoping to start to withdraw money in a shorter amount of time.
The benefit of advice
Despite the risk of losing money with some IRAs, a major benefit is worth discussing here. This boon is the fact there is so much advice available to help you out with your investment decisions.
In fact, those looking to open an IRA have two main options when it comes to seeking some advice. The first choice and something you can read more about at investormint.com is robo-advisors. These are not adorable little silver friends like Twiki in Buck Rogers but are in fact, automated algorithms based on sound financial principles that can help you to pick the investments that will best benefit your IRA. One of the biggest benefits of these is that they are cheaper than relying on real-life advice from professionals.
Of course, this real-life advice is the other option we’re talking about here, and there is definitely a place for that too when you are sorting your IRA. This is especially true if you have a particularly complicated financial situation, or you need step-by-step support when making your investments.
The problem of restrictions
Unfortunately, something that can be problematic with IRAs is the restriction that is placed on you. For example, in both traditional and Roth IRAs you have to be over 70 to withdraw the money and can be charged penalties if you take it out before this.
This can cause real issues if you are thinking of taking early retirement, something you can find out more about at thebalance.com. Making it a consideration that will need to factor into your long-term financial plans.